Government Contractors Must Meet Quality Assurance Standards

If you contract with the government, you must meet certain quality standards which will vary based on the product or service that you are providing. International standards may apply and U.S. quality assurance standards are part of contract terminology. A Certificate of Conformance, instead of source inspection, may be permitted at the discretion of the contracting officer. And, the government makes use of industry-specific standards created in the private sector. Subcontractors, as well as prime contractors, must adhere to government-mandated quality standards.

Every customer wants a quality product, and the government is no exception, remember with the government or its prime contractors, "quality will be assumed."

Therefore, when the government purchases products or services from your company, you will be subjected to a very definite standard of quality as specified in your contract. The level and type of quality standard that you will be required to meet will depend on the product or service being purchased. For example, an extensive quality requirement would probably not be imposed if you are producing a non-complex item, since simple measurement or testing would be able to determine whether it conforms to contract requirements.

To assure the government, as well as other prospective customers, that you will provide a quality product, you need to have a well-documented quality assurance (QA) program in place. Your program should provide a systematic approach for evaluation, inspection, testing, calibration or whatever is needed to monitor and assure the quality of your product. And, most importantly, that approach should be written down.

From the government's point of view, the purpose of a quality program is to provide a way to assure that an item complies with contract specifications. From your point of view, the purpose is twofold: It will attract and assure government buyers, and perhaps even more importantly, it will also save you money by providing you with the necessary indicators and tools to identify problem areas and the means for correcting those areas. It will make you look at every aspect and phase of your manufacturing and operating processes as well as the results of those processes. If a process results in a bad output, you will be able to identify where changes need to be made to produce an acceptable product.

Example

The owners of a small company in the Midwest that manufactured items for the government had no quality control system, but they did have a 100-percent acceptance rate with the government inspectors. However, they were losing money and couldn't figure out why.

Their approach was to scrap all the items that didn't meet government specs, let the government see only the "good" items, and simply buy enough materials to accommodate the high scrap rate. While this approach resulted in a high acceptance rate, the high cost of materials ate into their profits and hurt the company financially. A good quality control system would have helped them identify the real problem, reduce the amount of scrap, and cut the cost of materials.

Set up a good quality control system and it will pay for itself by reducing material and operational costs, and will make your company more attractive to prospective customers. Remember that the government, like any customer, wants a quality product, on time and at a reasonable price. No more, no less. And these days, ISO certification becomes a marketing tool to help sell your company.

A high-quality QA program will also assure that the reliability and quality of the product are maintained throughout the life of the product. Companies that do business with the government need reliability assurance, since the government now requires guarantees on some of their purchases. Also, an aggressive quality control program will prevent product degradation below some minimum requirement that you set.

The government assures quality by reviewing a contractor's inspection system, quality program, or any method used by the contractor to assure compliance with the contract requirements. But, regardless of the government's quality assurance actions, the contractor is responsible for inspecting and controlling product quality, and for offering to the government only materials that conform to contract requirements, either as an individual item or in conjunction with any other item.

Tip

All government quality assurance requirements are spelled out in Part 46 of the Federal Acquisition Regulation (FAR). Any language that you will see in a bid or contract related to quality control consists of clauses extracted from this Part.

Contract Quality Requirements

When the contracting officer issues a sealed bid (IFB) or a request for proposal (RFP), the solicitation will specify the quality provisions that will be required by the government. Every solicitation or bid will include one of four basic categories of QA coverage for assuring conformance of products and services to contract requirements:

Contractor's existing quality assurance system (applicable to contracts for commercial items). When the government buys commercial items, it may rely on the contractor's existing quality assurance system, without government inspection and testing. However, if customary market practices for the commercial item being bought include in-process inspection, then the government may do some inspection and testing by its own personnel. Any in-process inspection conducted by the government must be conducted in a manner consistent with commercial practice.

Inspection by the contractor (applicable to contracts for non-commercial items $100,000 or less). When a contract for non-commercial items (i.e., items built to government specs) is expected not to exceed the simplified acquisition threshold of $100,000 or less, the government may specify that the contractor is responsible for performing all inspections and tests necessary to substantiate that supplies or services furnished conform to contract quality requirements. However, the government may impose stricter requirements if it has special needs that require a greater degree of quality assurance.

Standard inspection requirements (applicable to contracts for non-commercial items over $100,000). When a contract for non-commercial items is expected to exceed $100,000, the government may require the contractor to provide and maintain an inspection system that is acceptable to the government. The government also has the right to conduct inspections and tests while work is in progress and to require the contractor to keep and make available to the government complete records of its inspection work. Here we are talking about more complex items, such as sub-assemblies, minor components, or items critical to function or safety.

Higher-level quality standards (applicable to complex or critical items; contracts may be for less than $100,000). When a contract is for complex or critical items, higher-level requirements are applicable. The contracting officer is responsible for identifying the higher-level standard(s) that will satisfy the government's requirement. Examples of higher-level standards that the contracting officer may cite are ISO 9001, 9002, or 9003; ANSI/ASQC Q9001, Q9002, or Q9003; QS-9000; AS-9000; ANSI/ASQC E4; and ANSI/ASME NQA-1. (We discuss some of these standards in more detail, below.) This quality level would be required when it is important for control of work operations, in-process controls, and inspection or attention to such factors as organization, planning, work instructions, documentation control, etc.

Quality Requirements May Apply for Subcontractors

You may be thinking to yourself, "If I am just a subcontractor, I won't have to do all this quality stuff, will I?" Guess again.

In many instances, a prime contractor will find it necessary or desirable to pass along the quality requirements to the subcontractor. Why? The prime contractor is responsible for the quality of materials supplied by the subcontractors or suppliers, and it is in its best interest to assure that all suppliers are capable of providing the materials and meeting the quality requirements of the prime contract.

The only way that the prime can assure itself that you can do quality work, on time and within budget, is to inspect your systems and get them approved. The day of the "pal" or "buddy" at the prime level that will issue a contract just on an owner's assurance that the company can deliver the required product is becoming a thing of the past. Many a small business that had this type of relationship has found, to their woe, that it must still have some kind of quality control system in place. So you must market your company in ways that you might not have had to before.

To the surprise of many contractors and subcontractors, government contract quality assurance at the subcontractor level does not relieve the prime contractor of any responsibilities under the contract nor does it establish a contractual relationship between the government and the subcontractor. So, if you think that you are getting out of some of the quality "stuff" by being a sub, think again.

The prime might, under a special exception or for a particular job, let you slide by without a QA program for a while, but it will eventually want to see a formal program in place or it won't want to work with you. Therefore, you may as well start creating your own program now, and do it to your satisfaction, without having the pressure of having to create one on the eve of a bid contract that you really want.

Work Smart

So what do your customers expect?

On Time - Do what you say you will do.

Quality - Understand and meet all the requirements.

Price - Be competitive.

Communication - Do it.

Technology - Must be investing in order to meet the above requirements.

And what do you need to do?

Understand Customer Expectations

Diversification

Increase Value to the Customer

International Markets

Federal Government Opportunities

Flexible Networks

Educate yourself

International Quality Assurance Standards May Apply to Your Government Contract

ISO international standards, developed by the International Organization for Standardization (ISO) based in Geneva, Switzerland, are considered among the world's strictest and highest quality standards. The ISO, a non-governmental organization established in 1947, comprises a worldwide federation of national standards bodies from each of 100 countries. The organization aims to facilitate the international exchange of goods and services by establishing international standards and reconciling regulatory differences between countries.

ISO standards contain precise criteria for the features and characteristics of products and services to ensure that these products and services are fit for their purpose. For example, the format of credit cards is derived from an ISO international standard. Complying with an international standard, which defines such features as the optimal thickness (0.76 mm) of each card, means that the cards can be used worldwide.

International standards thus contribute to making life simpler and to increasing the reliability and effectiveness of the goods and services that we use. Coordinated standards for similar technologies in different countries or regions can also effectively remove so-called "technical barriers to trade."

The scope of ISO covers all technical fields, except electrical and electronic engineering, which is the responsibility of the International Electrotechnical Commission (IEC). The IEC is the international standards and conformity assessment body for all fields of electrotechnology. The work in the field of information technology is carried out by a joint ISO/IEC technical committee.

The ISO issues the certifications and certifies individuals that work with companies in setting up ISO standards in their business. ISO certification is very pricey; on average, it runs between $20,000 and $35,000 per year. A company can't say that it is ISO unless a certified ISO auditor has declared it so. Because of the cost of ISO, some contracts will specify ISO compliant. While this doesn't require certification, it does mean you are taking steps in that direction.

ISO 9000

ISO 9000 is a kind of "International Good Housekeeping Seal of Approval." It's actually part of a series of standards referred to by numbers—ISO 9001, 9002, 9003 refer to standards for quality management; ISO 14000s refer to standards for environmental management, and so forth. These and other international standards are administered via the International Organization for Standardization (commonly referred to as ISO*), founded in 1947 and based in Geneva, Switzerland. (Several previous efforts at international standardization were halted due to WWII, and ISO took up where those left off.)

Early on, only engineers knew or cared about ISO standards. The national standards bodies from many countries got together to set up some common industrial standards to facilitate international trade and allow for mutually beneficial exchange of information, technology and science. Today there are 130 countries participating. Initially, they were focused on industrial topics such as temperature, weight, measures, material strength and other obsessions of the world's mechanical engineers.

In current times, you benefit every day from the ISO's work. For example, every time you swipe a credit card, load film into your camera, or run a ream of paper through your Xerox machine or printer, you are benefiting from an ISO standard. You can print your letters on any printer in the world thanks to ISO 256, which standardized paper sizes so manufacturers know how to build their printers and paper mills know how to cut their stock to fit. You can buy the right speed film for your fancy new camera in any country in the world. No need to pack a dozen rolls before you leave on vacation and risk running them through the airport X-ray machines. Your Visa card works fine in Toledo, Ohio or Toledo, Spain. And think of the standardization benefits for the computer and telecommunications industries . . . so necessary to our Global Village!

Your prospective customer wants to know if you're ISO 9000 certified so that he'll be confident he can rely on the conformity of your products or processes or services to ISO 9000 quality standards. Many industries require their suppliers to acquire this certification. It saves them time and money, and enhances quality and safety, regardless of the country of origin of the parts or products they may be using.

ISO 9000 is a set of five universal standards for a Quality Assurance system that is accepted around the world. Ninety countries have adopted ISO 9000 as national standards, and the federal government is moving closer to having ISO as the one, so to speak, standard to replace its major systems standard, MIL-Q-9858.

When a customer, such as the government, purchases a product or service from a company that is registered to the appropriate ISO 9000 standard, the customer has important assurances that the quality of what it receives will be as it expects.

ISO 9000 registration is rapidly becoming a must for any company that does business with the government or overseas involving complex or critical items. Many industrial companies require registration by their own subcontractors, so there is a growing trend toward universal acceptance of ISO 9000 as an international standard.

The most comprehensive of the 9000 set of standards is ISO 9001. It applies to industries involved in the design and development, manufacturing, installation and servicing of products or services. The standards apply uniformly to companies in any industry and of any size.

Many companies require their suppliers to become registered to ISO 9001, and because of this, registered companies have found that their market opportunities have increased. Registered companies have also had dramatic reductions in customer complaints, significant reductions in operating costs and increased demand for their products and services.

A company in compliance with ISO 9001 ensures that it has a sound Quality Assurance system, and that's good business. ISO 9002 is almost identical to ISO 9001, except that the provisions on "Design Control" are only applicable to 9001. Therefore, ISO 9001 is the appropriate standard if your organization carries out the innovative design of products or services; otherwise ISO 9002 is applicable.

the specified requirements for the product are stated in terms of an established design or specification, and

confidence in product conformance can be attained by adequate demonstration of a supplier's capabilities in production, installation, and servicing.

ISO recognizes the importance of small businesses in this chain of supply and manufacture, and even has a special page on its website pointing you to resources geared to firms of your size. There are also software products to help you step through this process. And, if you don't want to wade through this standardization, certification and audit process on your own, you can always hire a certified consultant to do it for you. Underwriters Labs (UL) is probably the most familiar provider of these services on that particular list of consultants.

*Before you conclude that ISO is not the proper acronym for International Organization for Standardization—which you would logically conclude would be IOS—be advised that ISO is not an acronym at all. ISO, according to its website, is a Greek word meaning "equal." (A la the dreaded Isosceles triangle of your sophomore year in high school, remember?) Think of the word isometric, which means "equal measure." By using a word, ISO, instead of an acronym such as IOS, the organization avoids the confusion that would result from translating International Organization for Standardization into 130 different languages, creating a plethora of different acronyms for the same body. ISO is ISO in every language and nation of the world. How's that for standardization!

ISO 14001

Before we end our discussion of ISO standards, we want to mention ISO 14001, an emerging international standard for environmental management systems (EMS). The ISO 14000 series is a voluntary set of standards intended to encourage organizations to systematically address the environmental impacts of their activities. The goal is to establish a common approach to environmental management systems that is internationally recognized, leading to improved environmental protection and reducing barriers to international trade.

ISO 14000 is a management system standard, not a performance standard. It is intended to be applicable to firms of all shapes and sizes around the world. The standard does not require specific environmental goals.

Instead, it provides a general framework for organizing the tasks necessary for effective environmental management, including planning, implementation and operations, checking and corrective action, and management review. The series of documents that encompasses ISO 14000 includes components such as environmental management systems, environmental auditing, environmental labeling and product life cycle assessment.

The ISO 14001 standard, which lays out requirements for establishing an EMS, is the centerpiece of the series. In order to qualify for ISO certification, firms must meet the requirements laid out in the ISO 14001. All of the other standards in the ISO 14000 series provide supporting guidance.

ISO 14001 is currently the subject of heated debate. Proponents of ISO 14001 argue that the new standard will be an effective tool for improving industrial environmental performance and help to ease burdens on environmental regulators. At the same time, many in the environmental community worry that compliance with ISO 14000 does not guarantee environmental improvements.

Work Smart

There are several websites that offer information about ISO standards. Search for "ISO" or "ISO standards" to get a list. You can also receive information by contacting:

American National Standards Institute
11 East 42nd St.
New York, NY 10036
Phone: 1-212-642-4900
Fax: 1-212-302-1286

Higher-Level U.S. Government Contracting Standards in Contract Terminology

The U.S. government is moving closer to having ISO as the one, so to speak, standard to replace its major quality assurance standard for complex military systems and hardware, MIL-Q-9858.

But a funny thing about the government, particularly the military, is that old habits die hard. Two quality assurance standards, MIL-I-45208 (An Inspection System) and MIL-Q-9858A (A Quality Program), have been canceled, but live on in contract terminology.

MIL-I-45208

Entitled "An Inspection System," this quality specification pertaining to military items sets forth the objectives and essential elements of an inspection system, and was referenced in a contract whenever an inspection system was required for the item. This system was used when technical requirements required in-process as well as final end item inspection, including control of measuring and testing equipment, drawing and changes, and documentation and records.

This requirement impacted both large and small businesses alike. In simple terms, it meant that you had to document your inspection system to assure continuity.

This spec was canceled a few years ago, along with MIL-STD-45662 (calibration standard), but there are many contracting officers and contracts that still require it, but don't use the name.

MIL-Q-9858A

Entitled "A Quality Program," these requirements are sometimes still referenced whenever the technical requirements of a contract require such things as control of work operations, in-process control, inspection, organization, work instructions, documentation control and advanced metrology. This specification is intended for use in contracts that involve complex types of military hardware and systems.

Tip

Folks, this is not for the faint of heart. Don't try to put one of these together yourself. Our best advice is to get an expert to help you. By the way, this standard has also been canceled and mostly replaced by the ISO series

Certificate of Conformance

A Certificate of Conformance may be used in certain instances instead of source inspection at the discretion of the contracting officer. When a Certificate of Conformance is provided for in the contract, it gives the Contract Administration Office an option to allow material to be accepted and shipped without being inspected.

However, this option is exercised only when product quality history is excellent. When it is exercised, contractors are notified in writing by the inspector that the Certificate of Conformance procedure is applicable and the company can ship. Without this written notification, the contractor must expect regular inspection of product before shipment. Remember that the Certificate of Conformance is for the convenience of the government, not the contractor.

The government uses a somewhat complicated method to assign titles to the specifications it uses in its requests for bids on a contract.

Federal specifications. The titles of federal specifications begin with a series of letters, followed by another letter and a serial number, and possibly a letter indicating the latest revision of the specification. The letter A represents the first revision, B represents the second revision, and so on. For example, A-A-104 is a federal spec for toothpaste. A-A-104B is the second revision of this spec.

Military specifications The titles of military specifications begin with the letters MIL, MS, or DOD, followed by the first letter in the first word of the title, a serial number, and possibly a letter indicating the latest revision of the specification. It may also be followed by a number in parentheses indicating the last amendment to the specification.

"Revisions" represent major changes to a specification, and a revised specification supersedes all of the earlier versions. The letter A represents the first revision, B represents the second revision, and so on. "Amendments" represent minor changes to a specification, and an amended specification supplements, but does not replace, the latest revision and all earlier amendments.

Example

For example, MIL-C-85322 is a military spec for "Coating, Elastomere, Polyurethane, Rain Erosion Resistant, For Exterior Aircraft Use." DOD-L-85336 is a military spec for "Lubricant, All Weather (Automatic Weapons)." DOD-L-85336A represents the first revision of DOD-L-85336. MIL-L-85314A (1) is a military spec for "Light Systems, Aircraft, Anti-Collision, Strobe." MIL-L-85314A represents the first revision of MIL-L-85314. This first revision has been amended one time [indicated by the (1)].

Industry-wide standards. The titles of industry-wide standards begin with the letters in the abbreviation of the appropriate association, institute or society, followed by identifying letters and/or numbers. For example AWS A6.I-66 is an industry-wide safety standard for "Gas Shielded Arc Welding" from the American Welding Society (AWS). ANSI B4.1-67 is an industry-wide standard for "Cylindrical Parts, Preferred Limits and Fits for" from the American National Standards Institute (ANSI).

Government Mandated Quality Assurance Procedures for Measurements, Packaging, and Shipping

If you need to establish and maintain a system of all measurement and test equipment used in the contract, you must use Calibration Systems Requirements (ISO 10012-1, ANSI/NCSL Z540-1.

Work Smart

Some years ago, there was a really nice spec, MIL-STD-45662, that thoroughly explained the how and why of what you needed to do to establish and maintain a system of all measurement and test equipment used in the contract. Although the new spec is shorter, we miss the way that the 45662 explained what was needed. It was a great help for new contractors that had never had a calibration system and, for the most part, was easy to follow.

You may be able to get a copy of the old 45662 standard by contacting the Information Handling Services Group Inc. and ordering the historical files from them. They will charge a fee, but you might find it a good first step in creating your QA system. Contact your local PTAC because they may be able to get the information specs and standards at less cost to you than through a commercial source.

Assuring Packaging and Shipping Requirements

Packaging requirements are a big deal when you do business with the government. They need to be carefully considered and analyzed, not only in pricing out a bid, but also in implementing a QA program. To aid your understanding, we think it would be helpful to define the terms "packaging" and "packing" the way the government defines them.

Packaging. Packaging is defined in the Governments Contract Dictionary as:

"an all-inclusive term covering cleaning, preserving, packaging, packing, and marking required to protect items during every phase of shipment, handling, and storage."

"The methods and materials used to protect material from deterioration or damage. This includes cleaning, drying, preserving, packing, marking and unitization." (Unitization is a government term that defines the "unit" of shipment and refers to a grouping of items for shipment.)

Packing. Packing is: "the assembling of items into a unit, intermediate, or exterior pack with necessary blocking, bracing, cushioning, weatherproofing and reinforcement."

The reason that we defined these terms is that some companies might think that if they produce a quality part, all they need to do when they ship is drop it in a box with some of those "peanuts" and send for UPS. As the definitions imply, there is more to it; a lot more. To further illustrate, let's look at what might be required in the packaging of a part that might be used by the Army.

Assume that your company was contracted by the Army to manufacture a simple, inexpensive item, specifically a "block" consisting of a metal piece approximately 2x4 inches made of a specified material that will withstand high pressure.

So how would you have to package this little block? Under typical government packaging requirements for such a product, the block must first be packed into a plastic package. The plastic package must then be put into another pack that is cushioned and reinforced. A water/vapor seal is then put over the entire package. The sealed package is then packed into a shipping container.

Sounds like a lot for just one item, right? Well, that little block is part of a 155 mm howitzer cannon and is used to fire rounds (those big pointy things that explode when they land). And although this may seem a somewhat roundabout and melodramatic way to show the importance of packaging, the typical civilian usually does not realize how the part he or she is working on will be used or delivered to its ultimate destination. The little block might be headed for a 10,000-mile flight, dropped out of a plane at 5,000 feet, and must be ready to work the first time, and every time, when it lands.

In addition, as electronic technology becomes more complex, expensive and sensitive to damage, protecting electronic products and the work environment is a key government goal. And one place this is reflected is in packaging standards.

So although packaging requirements on a government contract can sometimes seem complex and difficult, if you're smart and do your homework, you can be successful at meeting the challenge.

Packaging Levels and Specs

The government uses 3 levels of packing and protection:

Level A, Maximum Protection, is used for the most severe shipment, handling or storage conditions, or for unknown transportation or storage conditions. Examples: All-wood boxes, sheathed crates, plastic or metal specialty containers.

Level B, Intermediate Protection, is used for known and favorable shipment, handling and storage conditions. Examples: Single-, double-, or triple-walled, weather-resistant fiberboard, sealed at all openings.

Level C, Minimum Protection, is used for known and most favorable shipment, handling and storage conditions. Example: Domestic fiberboard or paperboard.

To give you an overview of what is involved in "packaging," we are listing three packaging specifications, below. But because this area is so complex, we recommend that you get an expert to help you.

You can contact the government office administering your contract and request help from a government packaging specialist. Or, better yet, you can find a packager that has experience in working with the government and form a partnership with that company. Then you, the packager, and the government will all come out fine.

Sample Packaging Specifications

Number

Title

Price

Revision/
Edition

Date

Pages

MIL-STD-2073-1

DOD Materiel Procedures for Development and Application of Packaging Requirements

$94.00

D

12/15/1999

212

MIL-STD-2073-2

Packaging Requirement Codes

$48.00

C

10/01/1996

85

MIL-STD-726

Packaging Requirement Codes

$93.00

H

06/23/1993

208

Premium Services for Business Owners, Managers & Advisors

Business Entity Compliance from CT Corporation — Partner with the Industry Leader